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ZARA Case Study Mind Map :world_map: - Coggle Diagram
ZARA Case Study Mind Map
:world_map:
Relevant Facts
POS is stable, inexpensive, and simple to deploy/maintain.
Runs on DOS, no longer supported by Microsoft.
Store managers want inventory visibility.
Company heavily prioritizes speed, decentralization, and reliability.
Low spending from IT (0.5%), they do not want to change that
Problems
Deciding to upgrade POS systems
Zara's POS system with in house apps is part of the backbone to it's company alongside managers transferring data from PDA's
The insistence on leaving IT out of stores demands a simple, though outdated solution for establishing new stores
Zara hasn't bothered to update their IT systems since they first set them up
Their systems are at risk of having support dropped, but also having to risk rolling out a new system
The IT group has to make a difficult decision as to whether they should upgrade things or not
Managers have to spend extra time updating stock and contacting other stores for info about available merchandise
The IT department is responsible for making this decision
Managers of stores want more features for commerce
The lack of connectivity between stores and systems makes it hard to deploy new updates
A focus on making it easy to establish new stores excluded IT from them as much as possible
Zara assigns responsibilities to individual departments rather than whole.
The IT department's power over the company is limited since everyone is too busy doing things as usual
IT is forced to figure out how to deliver value without grinding the organizations business to a halt
Store managers are stuck working with comically outdated and basic software
Management is responsible for establishing a commercial for being able to work with IT to better deliver value ot stores.
PDA systems are too cumbersome
Doing returns and other more data intensive operations on the PDA is time consuming
Using a small stylus for mass amounts of input is difficult and can lead to errors.
At the time of introduction. Faxing forms took too much time and paper
Managers have to spend more time than they should updating information and transmitting it between staff
The IT Group isn't able to do much without further addressing other problems with the infrastructure
The organization has to deal with delays in getting the latest trends
IT is responsible for figuring out a new way to allow managers to input data
Lack of Real-Time Networking and Inventory Visibility
Sales data is manually moved via floppy disk; POS terminals are not networked.
Except for manual counting, store employees are unable to see inventory levels at other stores or even at their own.
Inventory transfers and stock inquiries slow down operations by requiring phone calls.
Limited IT Investment and Scalability Risks
Compared to the industry average of 2%, Zara invests just 0.5% of their sales in IT.
Since all of the software is created internally, there will be long-term maintenance and scalability problems as the company continues to grow.
There is a talent and workload constraint since only approximately 50 IT staff deal with worldwide operations.
Outdated Systems Risks
If DOS becomes unsupported puts Inditex at risk from hacking/malware
If they are transmitting sales data without protection/encryption this can lead to stolen data
Outdated systems may not comply with current data-privacy laws that other countries impose
Possible Solutions
Develop a new POS System
Pros
Would allow fulfilling managers demands
Would greatly secure their POS systems
less work for employees in the long run
Cons
Costly
Risky. Zara's understanding of supply and demand is codependant on their POS
Implement In-Store Networking (Preferably Wireless)
Pros
speeds up order processing and data transfer.
saves manual typing and floppy disk usage.
provides real-time sales monitoring and data access.
Cons
installation fee and minimal IT maintenance increase.
Network stability problems in some areas may occur if not configured correctly.
more workload for employees
Increase IT Investment and Staff
Pros
lowers the cost of growth and lowers the risk of bottlenecks.
enhances responsiveness and creativity.
enhances scalability in the longer term.
Cons
Cultural change: Zara's frugal IT strategy might need to be reconsidered
involves an initial payment.
could set finances back
focuses on fixing the issue long-term but not short-term
Phased Upgrades to POS
Pros
Implement changes in tester stores
Flexible budgeting over timeframe
Can make adjustments based on feedback
Cons
Inconsistent systems
Careful management, high stress
Timeline
:timer_clock:
Zara’s DOS-based POS system had been in use since the 1990s.
By 2003, internal debate arose over whether to upgrade the POS.
Salgado (head of IT) pushed for modernization due to DOS obsolescence.
Sánchez (technical lead) defended the current system’s stability and simplicity.
Zara's first store opened, 1975, implementing real-time demand without POS
By 1985 there was the push to integrate IT into the ordering process, creating a custom system
Stakeholders
Inditex
Zara
Various Comercials
Design & Manufacturing
Store Product Managers
Ordering
Fulfillment
Stores
Managers
Other Staff
Employees
IT Department
Other Clothing Brands
Inditex CEO: Jose Maria Castellano Rios
Xan Salgado: Head of IT @ Inditex
Bruno Sanchez Ocampo: POS Tech Lead